Medical office sector: Broader recovery fortifies positive outlook

Resilient during the health crisis, the medical-office segment is in a position of strength, according to Marcus & Millichap.

Demographic trends and an anticipated boost in health services are positioned to foster long-term tenant demand that will bolster investor confidence in the sector. Shorter term, the full-scale reopening of most states’ economies and widespread vaccination efforts have laid the foundation for a broad economic recovery that will fuel continued employment growth in the second half of this year. The expiration of enhanced unemployment benefits in September and many states’ plans to terminate the allowance prior to the deadline have the potential to motivate more individuals to obtain work. Furthermore, the reopening of schools this fall should further aid employers when filling open positions during the final third of the year. The resulting employment growth will raise the number of commercially insured households, lifting health spending and the